PRKR 10-K & 10-Q changes, risk factors and insider trading

We have had significant losses and negative cash flows in nearly every year since inception, and continue to have an accumulated deficit which, at December 31, 2024,2025, was approximately $448.2$455.6 million. Our net loss for the yearyears ended December 31, 2025 and 2024 was approximately $7.4 million and $14.5 million, compared to net income for the year ended December 31, 2023 of $9.5 million.respectively. Our independent registered public accounting firm has included in their audit opinion on our consolidated financial statements as of and for the year ended December 31, 2024,2025, a statement with respect to substantial doubt about our ability to continue as a going concern. Note 2 to our consolidated financial statements included in Item 8 includes a discussion regarding our liquidity and our ability to continue as a going concern. Our consolidated financial statements have been prepared assuming we will continue to operate as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. If we become unable to continue as a going concern, we may have to liquidate our assets and the values we receive for our assets in liquidation or dissolution could be significantly lower than the values reflected in our consolidated financial statements. The substantial doubt as to our ability to continue as a going concern may adversely affect our ability to negotiate reasonable terms with our vendors and may adversely affect our ability to raise additional capital in the future.

Because we have a history of net losses and negative cash flow from operations, we have funded our operating costs primarily from the sale of debt and equity securities, including our secured and unsecured contingent debt obligations. Our current capital resources include cash and cash equivalents of $4.9$4.4 million at December 31, 2024,2025, which will not alone be sufficient to meet our working capital needs for the twelve months afterfollowing the issuance of our consolidated financial statements. Our business plan will continue to require expenditures for patent protection and enforcement and general operations. If we do not generate sufficient revenues from our licensing and patent enforcement programs, we will require additional capital to fund our operations. Additional capital may be in the form of debt securities, the sale of equity securities, including common or preferred stock, additional litigation funding, or a combination thereof. Failure to raise additional capital may have a material adverse impact on our ability to achieve our business objectives.

Since 2011, we have spent a significant amount of our financial and management resources to pursue patent infringement litigation against third parties. We believe this litigation, and other litigation matters that we may in the future determine to pursue, will continue to consume management and financial resources for long periods of time. There can be no assurance that our current or future litigation matters will ultimately result in a favorable outcome for us or that our financial resources will not be exhausted before achieving a favorable outcome. In addition, even if we obtain favorable interim rulings or verdicts in particular litigation matters, they may not be predictive of the ultimate resolution of the matter. Unfavorable outcomes could result in exhaustion of our financial resources and could hinder our ability to pursue licensing and/or product opportunities for our technologies in the future. Failure to achieve favorable outcomes from one or more of our patent enforcement actions will have a material adverse impact on our financial condition, results of operations, cash flows, and business prospects.

Our licensing and enforcement activities are subject to numerous risks from outside influences, including new legislation, regulations and rules related to obtaining or enforcing patents. For instance, over the past decade, the U.S. has enacted sweeping changes to the U.S. patent system including changes that transition the U.S. from a “first-to-invent” to a “first-to-file” system and other changes that alter the processes for challenging issued patents. To the extent that we are unable to secure patent protection for our future technologies and/or our current patents are challenged such that some or all of our protection is lost, we will suffer adverse effects to our ability to offer unique products and technologies. As a result, there would be an adverse impact on our financial position, results of operations and cash flows and our ability to execute our business plan.

At December 31, 2024,2025, we had 114.0143.2 million shares of common stock outstanding and had outstanding optionsoptions, restricted share units, and warrants for the purchase of up to 35.229.3 million additional shares of common stock, the majority of which approximately 34.4 million were exercisable as of December 31, 2024.2025. In addition, as described more fully below, holders of convertible notes may elect to receive up to 27.724.7 million shares of common stock upon conversion of the notes, and we may elect to pay accrued interest on the notes in shares of our common stock. The majority of the shares of common stock underlying these securities are currently registered for sale to the holder or for public resale by the holder. The amount of common stock reserved for issuance may have an adverse impact on our ability to raise capital and may affect the price and liquidity of our common stock in the public market. In addition, the issuance of these shares of common stock will have a dilutive effect on current shareholders’ ownership.

The trading price of our common stock has been and may continue to be volatile. Between January 1, 20232024 and March 1, 2025,2026, the reported high and low sales prices for our common stock ranged between$0.07between $0.09 and $1.18 per share. The price of our common stock may continue to be volatile as a result of a number of factors, some of which are beyond our control. These factors include, but are not limited to, developments in outstanding litigation, our performance and prospects, general conditions of the markets in which we compete, and other economic and financial conditions. Such volatility could materially and adversely affect the market price of our common stock in future periods.

In DecemberNovember 2024,2025, we completed two privateregistered placementdirect transactionsofferings with accredited investors under a shelf registration statement ("Shelf") for net proceeds of $5approximately $4.4 million. These proceeds willare bebeing used to fund our operationsongoing in 2025.operations.

For the year ended December 31, 2024,2025, we incurred a net loss of approximately $14.5$7.4 million and used cash for operations of approximately $3.2$5.1 million. A significant amount of future proceeds that we may receive from our patent enforcement and licensing programs will first be utilized to repay borrowings, legal fees, and litigation expenses under our contingent funding arrangements. InWe addition,have $0.9 million in convertible debt, at conversion prices ranging from $0.08 to $0.13 per share, with maturity dates between July 2026 and January 2027 that we haveanticipate approximatelywill $1.6be converted or extended in accordance with the current terms of the notes. Additionally, we issued 3.3 million shares of our common stock in March 2026 in satisfaction of $0.7 million in convertible debt that,and ifrelated notaccrued converted,interest willthat maturematured between July 2025 andin March 2026. Although all of our remaining convertible notes have conversion prices that are below the market price of our common stock, conversion is at the option of the holder and there can be no assurance that the holders will exercise their conversion option prior to maturity. Our independent registered public accounting firm has included in their audit report an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. See Note 2 to our consolidated financial statements included in Item 8 for a discussion of our liquidity and our ability to continue as a going concern.

We used cash for operations of approximately $5.1 million and $3.2 million for the yearyears ended December 31, 20242025 and generated2024, cash from operations of $10.8 million for the year ended December 31, 2023.respectively. The increase in cash used for operations from 20232024 to 20242025 is primarily due to proceedsreductions receivedin wages payable and other accrued liabilities from the2024 patentto license2025, along with an increase in prepaid insurance and settlementprepaid agreement entered intoservices in February 2023, net of contingent legal fees and expenses paid.2025.

We made payments of $13.9 million on our secured contingent payment obligation during the year ended December 31, 2023, and paid approximately $0.2$0.1 million and $0.3$0.2 million in other debt obligations during the years ended December 31, 20242025 and 2023,2024, respectively. During the yearyears ended December 31, 2025 and 2024, we received aggregate net proceeds from equity-based financings and option and warrant exercises of approximately $5.8 million, compared to aggregate net proceeds of $5.9$4.8 million from debt and equity-based$5.8, financings and option exercises during the year ended December 31, 2023, including $5.0 million in new borrowings under our secured contingent payment obligation.respectively.

Patent enforcement litigation is costly and time-consuming, and the outcome is difficult to predict. We expect to continue to invest in the support of our patent enforcement and licensing programs. We expect that cash flows generated from proceeds received from patent enforcement actions and/or technology licenses in 2025,2026, after deduction of contingent payment obligations, willmay not be sufficient to cover our operating expenses and debt repayment obligations. In the event we do not generate revenues, or other patent-related proceeds, sufficient to cover our operational costs and contingent repayment obligations, we will be required to raise additional working capital through the sale of debt or equity securities or other financing arrangements.

Our secured contingent payment obligation is payable to Brickell as a result of $23 million in aggregate borrowings under litigation funding arrangements initiated in 2016. As of December 31, 2024,2025, we have repaid Brickell an aggregate of $17.3 million to date under these agreements. The contingent payment obligation to Brickell is recorded at its estimated fair market value of $40.7$39.7 million at December 31, 2024,2025, ana increasedecrease of $11.3$1.1 million or 39%3% from the estimated fair market value at December 31, 2023.2024. This increasedecrease in fair value is primarily the result of changes in the estimated amounts and timing of projected future cash flows due to changes in probabilities and time frames based on the status of various patent infringement actions, particularly as a result of the favorable CAFC decision received in September 2024 that remanded the Qualcomm case back to district court.actions.

In addition, we have incurred unsecured contingent payment obligations in connection with various funding arrangements. These contingent payment obligations are payable from our share of patent-related proceeds after satisfaction of our priority obligation to Brickell and payment of contingent fees to legal counsel. These unsecured contingent payment obligations are recorded at an aggregate estimated fair value of $5.9$6.4 million at December 31, 2024,2025, representing aan decreaseincrease of $1.7$0.5 millionmillion, or 8.5% from the estimated fair market value at December 31, 2023.2024. This decreaseincrease is primarily the result of changes in the estimated amounts and timing of projected future cash flows due to changes in probabilities and time frames based on the status of various patent infringement actions. The maximum payment obligation for our unsecured contingent payment obligations is $10.8 million at December 31, 2024.2025.

As of December 31, 20242025 and 2023,2024, we had $3.5$3.1 million and $4.9$3.5 million, respectively in notes, convertible at the holders’ option, into shares of our common stock at fixed conversion prices ranging from $0.08 to $0.25 per share. The decrease in the carrying value of our convertible notes is the result of approximately $1.4$0.4 million in notes that were converted into approximately 9.63.0 million shares of our common stock during 2024.2025. The outstanding convertible notes as of December 31, 20242025 mature at varying dates from JulyJanuary 20252026 to January 2028. Notes representing approximately 40%45% of the outstanding principal balance are held by a single party and contain provisions for automatic extension of the maturity dates of the notes by up to ten one-year periods, if not revoked at the option of the holder.

We reported no licensing revenue for the yearyears ended December 31, 2025 and 2024. Licensing revenue was $25 million for the year ended December 31, 2023. Our licensing revenue is from patent licensing and settlement agreements resulting from patent enforcement actions filed by us. To date, all of our license and settlement agreements have consisted of a one-time, lump sum payment with no recurring future revenue. We recognized revenue from each contract when the parties’ performance obligations were met. Cost of sales related to the licensing revenue consists of amortization expense for the patents covered under the license agreements. Our licensing revenue is expected to vary based on the market size of the licensee and the specific terms of the license and settlement agreement.

We have elected to measure our secured and unsecured contingent payment obligations at fair value which is based on significant unobservable inputs. We estimated the fair value of our secured contingent payment obligations using a probability-weighted income approach based on the estimated present value of projected future cash outflows using a risk-adjusted discount rate. Increases or decreases in the significant unobservable inputs could result in material increases or decreases in fair value. Generally, changes in fair value are a result of changes in estimated amounts and timing of projected future cash flows resulting from increases in funded amounts, changes in estimated potential proceeds, the passage of time, and changes in the probabilities based on the litigation status of the funded actions.

For the year ended December 31, 2024,2025, we recorded a net increasedecrease in the aggregate fair value of our secured and unsecured contingent payment obligations of approximately $0.6 million, compared to an increase in the aggregate fair value of approximately $9.6 million.million for the year ended December 31, 2024. The majority of the change in fair value is attributable to changes in the estimated amounts and timing of projected future cash flows due to changes in the litigation status of various patent infringement actions,actions. includingThe significant increase in fair value in 2024 was, in part, the result of a September 2024 favorable CAFC remanddecision ofthat remanded our infringement action against Qualcomm backto tothe district court for trial.court.

We have accounted for our secured and unsecured contingent payment obligations as long-term debt. Our repayment obligations are contingent upon the receipt of proceeds from patent enforcement or other patent monetization actions. We have elected to measure our contingent payment obligations at their estimated fair values based on the variable and contingent nature of the repayment provisions. We have determined that the fair value of our secured and unsecured contingent payment obligations falls within Level 3 in the fair value hierarchy, which involves significant estimates and assumptions including projected future patent-related proceeds and the risk-adjusted rate for discounting future cash flows. Actual results could differ materially from the estimates made. Changes in fair value, including the component related to imputed interest, are included in the consolidated statements of comprehensive (loss) income under the heading “Change in fair value of contingent payment obligations.” Refer to Note 10 to our consolidated financial statements included in Item 8 for a discussion of the significant estimates and assumptions used in estimating the fair value of our contingent payment obligations.

In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20) - Induced Conversions of Convertible Debt Instruments. This update clarifies the assessment of whether a transaction should be accounted for as an induced conversion or extinguishment of convertible debt when changes are made to conversion features as part of an offer to settle the instrument. ASU 2024-04 is effective for reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods. Early adoption is permitted for entities that have adopted ASU 2020-06.2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity (Subtopics 470-20 and 815-40). We are currently evaluating the impact of this new accounting guidance.

The patent infringement trials against MediaTek and Realtek, scheduled to commence in March 2026 and April 2026, respectively, were postponed by the district court pending updates to the expert reports and related briefings. The partiesWe have submitted proposedour amendedsupplemental schedulingexpert ordersreports to the court that include submission of our revised expert reports in May 2026, submission of the defendants' responsive expert reports in June 2026, and final deadlines for all pre-trial motions by the end of July 2026.court. The revised trial dates are yet to be determined, and the district court judge originally assigned to these cases has recently announced his intent to step down at the end of summer 2026. The Realtek case has been reassigned to a new judge and we anticipate the MediaTek case, as well as our other pending Texas cases, will also be reassigned. We do not yet knowhave the impact of the district court judge's retirement on therevised case schedules for these cases. See Note 12 to our casesunaudited pendingcondensed inconsolidated thefinancial Westernstatements Districtfor ofa Texas.complete update on our legal proceedings.

We used cash for operations of approximately $0.9$1.7 million and $1.8$3.0 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The decrease in cash used for operations from 2025 to 2026 is primarily due to accruedbonus bonuses paidpayments in 2025 and increasesdecreases in legal, accounting and other third-party professional fees for services during the threesix months ended MarchJune 31,30, 2025.2026.

At MarchJune 31,30, 2026, we had cash and cash equivalents of approximately $3.4$2.5 million and an accumulated deficit of $457.2$457.0 million. Our working capital at MarchJune 31,30, 2026, was $1.7$0.8 million, a decrease of approximately $0.5$1.5 million from working capital at December 31, 2025. Our current liabilities at MarchJune 31,30, 2026 include $0.9$1.1 million in convertible debt that matures over the next twelve months if not converted, extended by one year at the holder's option in accordance withunder the terms of the note.note, or otherwise modified. The timing and amount of proceeds, if any, from our patent enforcement actions are difficult to predict. Furthermore, a significant amount of future proceeds that we may receive from our patent enforcement and licensing programs will be utilized to repay borrowings and legal fees and expenses under our contingent funding arrangements. These circumstances raise substantial doubt about our ability to continue to operate as a going concern for a period of one year following the issue date of these unaudited condensed consolidated financial statements.

Our convertible notes have conversion prices that are belownear the market price of our common stock as of MarchJune 31,30, 2026. We anticipate that all of our outstanding convertible notes will either (i) be converted by the holders prior to their scheduled maturity dates, or (ii) have their maturity dates automatically extended as provided under the terms of certain agreements; however, conversion and/or extension is at the option of the holders and there can be no assurance with respect to the holders' behavior. Even with the anticipated conversions or extensions of our convertible debt, our current capital resources are not sufficient to meet our liquidity needs for the next twelve months and we may be required to seek additional capital. Our ability to meet our liquidity needs for the next twelve months is dependent upon (i) our ability to successfully negotiate licensing agreements and/or settlements relating to the use of our technologies by others in excess of our contingent payment obligations, (ii) our ability to control operating costs, (iii) the behavior of our convertible note holders, and/or (iv) our ability to obtain additional debt or equity financing. We expect that proceeds received by us from patent enforcement actions and technology licenses over the next twelve months may not alone be sufficient to cover our working capital requirements.

We expect to continue to invest in the support of our patent licensing and enforcement program. The long-term continuation of our business plan is dependent upon the generation of sufficient cash flows from our technologiestechnology and/or productslicenses to offset expenses and debt obligations. In the event that we do not generate sufficient cash flows, we will be required to obtain additional funding through public or private debt or equity financing or contingent fee arrangements and/or reduce operating costs. Failure to generate sufficient cash flows, raise additional capital through debt or equity financings or contingent fee arrangements, and/or reduce operating costs will have a material adverse effect on our ability to meet our long-term liquidity needs and achieve our intended long-term business objectives.

Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

We reported no licensing revenue for the three and six months ended MarchJune 31,30, 2026 and 2025. Cost of sales for the three and six months ended MarchJune 31,30, 2026 and 2025 consists of amortization expense related to the patents covered under license agreements. Revenue resulting from our patent enforcement actions is highly unpredictable with respect to the amount and timing of receipt, and there can be no assurance that we will achieve our anticipated results.

Our selling, general and administrative expenses decreased by $0.3$2.3 million, or 22.9%,60.6%, during the three months ended MarchJune 31,30, 2026 when compared to the same period in 2025. This is primarily the result of a $1.9 million decrease in total share-based compensation and a $0.3 million decrease in outside professional fees, including litigation related costs.

The decrease in share-based compensation expense for the three and six months ended June 30, 2026 is primarily the result of one-time, non-cash charges recognized upon the modifications of previously issued option awards as discussed in Note 14 in the unaudited condensed consolidated financial statements. The decrease in outside professional fees for the three and six months ended MarchJune 31,30, 2026 is a result of decreased expenditures related to our social media and public awareness campaign, business and financial advisory services, and litigation costs primarily related to our certa petition for a writ of certiorari we filed with the Supreme Court in 2025.

We have elected to measure our secured and unsecured contingent payment obligations at fair value which is based on significant unobservable inputs. We estimated the fair value of our secured and unsecured contingent payment obligations using a probability-weighted income approach based on the estimated present value of projected future cash outflows using a risk-adjusted discount rate. Increases or decreases in the significant unobservable inputs could result in significant increases or decreases in fair value. Generally,The changes in fair value arefor athe three and six months ended June 30, 2026 were primarily the result of changes in the estimated amountsamount and timing of projected future cash flowsoutflows due to changes in the status of our patent infringement cases, increases in fundedaccrued amounts,interest passageon ofour time,secured contingent payment obligation, and changes in the probabilitiesrisk-free basedrates onof return used in the statuscalculation of thepresent funded actions.value.

Off-Balance Sheet Transactions, Arrangements and Other Relationships As of MarchJune 31,30, 2026, we had remaining outstanding warrants for the purchase of up to 2.5 million shares of our common stock with a weighted average exercise price of $0.60 per share and a weighted average remaining life of approximately 3.12.9 years. These warrants have an estimated grant date fair value of $1.2 million which is included in additional paid-in capital in our unaudited condensed consolidated balance sheets.